ICORating is one of the most reputed agencies in the world of digital currencies. They do a pretty good job at keeping track of the state of the market. Their most recent report about the third quarter of 2018 regarding all matter related to ICO funding point out to a significant nosedive with funding dropping to 48% of the levels reported in the second quarter of the year. Since the agency specializes in evaluating ICO initiatives, their reports are regarded as some of the most thorough and objective in the market.
Many companies review potential investment options using the information provided by ICORating, that’s why their findings are alarming in the worst way. This latest report has revealed that from June to August of this fiscal year only 4% of the planned ICOs managed to earn listings on any cryptocurrency exchanges and more than half of the ICO projects designed for the same period declared that they barely managed to raise $100,000 or less. This is a massive hit in the cryptocurrency industry, especially when side initiatives based on the same revenue models are still making money.
The Players Who Managed to do Good This Year
The first two quarters of 2018 were very generous with Telegram, the default communication channel of all ICO initiatives. Of the Listed ICOs, only EOS managed to score financing on the seven figures. The comparison between both companies could be regarded as a joke in business terms with Telegram earning almost $1 billion in profits just in the first half of the year and EOS earning $70 million. As ICOs go, EOS could be considered pretty successful, but they are the only ones who reached those numbers.
Among the top ten players in the list, the only one worth mentioning is The London Football Exchange who created a token utility listed as LFE and managed to be featured as one of the top 10 in the first three quarters of 2018. The mechanism behind LFE is a cryptocurrency used to power an ecosystem of related components made of sports, media, entertainment, finances, and a charity foundation. It was launched this year, and it drove business like crazy among their fanbase since the token allowed management of a fan-driven football community and offered the opportunity to partake in club and fan experiences.
Poor Performance on the ICO Market – The Reasoning Behind it
According to the analysis provided by ICORating, the reasons for the poor performance in the third quarter are many and fully traceable. The first one is an overall perception of the little promise showed by traditional ICOs for these dates. As the year is closing in on us, there hasn’t been a single ICO intuitive worth following or built on trusted partnership. The last reason was cited very often by professionals in the field contributing to the report. The increasingly ongoing lack of transparency from new ICO teams drive away investors and make them wary and suspicious.
The other factor affecting new ICOs are all issues related to regulation in the market. The lack of trust has just been addressed by many established players but is barely beginning to receive any form of attention needed from specific jurisdictions in order to increase investor confidence after so many ICO frauds took place in the last two years. Trust is often cited as one of the most significant drivers of investment if potential investors have the possibility to learn about new ICOs they can feel more secure before making financial decisions. Sadly the industry is not providing the information on acceptable terms.
Is There Any Solution to The Problem?
The report issued by ICORating cited a market downtrend fueled by the lack of new ideas from new developers. Most of these new project teams have nothing new to offer other than competing alternatives with other small players in the market. The fact that Bitcoin has been on a slump for most of the third quarter of the year and it seems to be keeping that trend until the year ends also doesn’t help at all. The blockchain is becoming the forefront of many companies using the tech as a means of integration and extra security in the real world.
The problem with these new models is that there is no trade of token utilities involved. Thus they are not considered ICO projects. Blockchain, on the other hand, is still regarded impractical on financial terms since the technology is still very slow when compared with practical payment means that use FIAT money. With Only 24 out of 597 projects getting listed in exchanges services, the solutions for the industry seem to be centered on further research, expansion of ideas, and exploring new grounds. Otherwise, the industry will fall in the same way Bitcoin is spiraling.